# Maximum Wage (not a tax bracket)

Discussion in 'Business & Economics' started by Success_Machine, Apr 1, 2011.

1. ### Success_MachineImpossible? I can do thatRegistered Senior Member

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I thought I would start a new thread on this topic. I hope discussion won't drift onto "tax brackets" because that's not what this is. This would be a regulation, like the minimum wage. But it wouldn't be a fixed value, it would be a ratio, based on the lowest paid worker at a given organization.

Basic rundown....

I've read that in California, 50% of the government tax revenue comes from the taxes paid by the richest 1%, ie. CEOs and executives of big corporations. Elsewhere the percentage of tax revenue coming from the super rich is nearly as high.

http://www.ntu.org/tax-basics/who-pays-income-taxes.html

The government has trouble stabilizing its tax revenues because of the volatile nature of these super-rich people that pay such a large portion of it. What would happen if the government introduced a law that eliminated the need to tax the rich, by redistributing the wealth using a "maximum wage ratio" ?

I propose a maximum annualized wage (including the value of all basic pay, bonuses, commissions, contracts, shares, etc.) earned by an employee, owner, shareholder, etc. of a company that is equal to 5-times the annualized income of the lowest paid worker at a company.

Case 1: If a company is a sole proprietorship, the annualized income can be as high as you want.

Case 2: If a company is a partnership, the annualized income of one partner cannot be more than 5-times larger than the income of the other partner.

Case 3: If a company employs 10000 people, and the lowest paid worker makes $10/hr (temp, contract, or full-time), or$20,000 annualized, then the top executive cannot make more than \$100,000 (cumulative from pay, shares, bonuses, etc).

Case 4: If a business owner is a foreigner who lives abroad, then the same rule applies. The annualized amount of fungible assets paid to that owner could not be larger than 5-times the amount transferred to the lowest paid worker.

Case 5: If a business owner wants to start more than one business, then this might be a way to bypass the limitation. Each business would then pay a certain amount as annual yields, not exceeding the 5-fold maximum wage limit.
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Cons:

a. that this would require a layer of oversight by the government,
b. businesspeople are obviously going to look for loopholes to increase their wealth beyond this limit, such as by charging personal expenses to the business without giving their employees the same right.

Pros:

a. I see this as a fair way to distribute wealth to a much larger number of people and thereby stabilizing the government's tax revenues.
b. there would be more money in the hands of a larger population to spend on basic goods & services, thereby stabilizing the economy.

Opinions?

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Yes, an opinion and a correct one at that, Good luck with ANY of those hare-brained ideas. I certainly hate and despise the tremendous salaries and benefits the top layers of management gets BUT you haven't the FAINTEST clue about how the real world operates - sorry.

5. ### Success_MachineImpossible? I can do thatRegistered Senior Member

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Well geez, don't hold back. Tell us what you really think. I'm waiting for a small granule of intelligent feedback. Tough standard I know, but if you try hard you might blurt something coherent.

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You've already gotten a LOT more intelligent feedback than the minimal amount expressed in those ideas.

Here's just one which clearly illustrates how incomplete/shallow your reasoning is: "Case 2: If a company is a partnership, the annualized income of one partner cannot be more than 5-times larger than the income of the other partner."

When the truth is that MANY partnerships exist where one is the major contributor of initial capital - perhaps even 100 times as much - and is therefore entitled to a FAR greater share than 5 times the remuneration of other one.

Are you starting to get the message now that there's a TON of things you haven't even begun to consider or do I have to totally destruct them all one at a time??:bugeye:

8. ### Success_MachineImpossible? I can do thatRegistered Senior Member

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Then a maximum wage ratio would be revolutionary and rather upsetting for that partner.

I might handle the case thusly:

- the investor would get his 5:1 ratio of the remuneration paid out from business revenues;
- the excess would have to be re-invested in job creation/capital expenditures to grow the business;
- the investor would get his investment back 100:1, same as the investment ratio, when he sold his share of the business to the other partner, or vice versa.

Or,

- the investor would get his investment back dollar for dollar for what he invested. That's another possibility.

I see nothing wrong with that.

Last edited: Apr 2, 2011
9. ### CarcanoValued Senior Member

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That would result in the lowest paid jobs being contracted out to other companies.

Instead of GM hiring their own janitors they would hire outside cleaning crews.

10. ### KilljoyKlownWhateverValued Senior Member

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I have to go with Read-Only on your ideas, but I will say I like the way you are thinking in that there should be a better way to regulate corporations. However if a Corp. wants the best talent in it's CEO's it has to pay more than the competition. Most people complain about the what the best athletes get paid, but can you suggest some way to distribute the player contracts more fairly? Would you take money from the best athletes and pay the rest more or would you let the owner have it? Would you take away a teams choice to pay more to build the team up with better players? Same principal applies to corporations.

11. ### CarcanoValued Senior Member

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The corner stone of economics - consensuality always finds a way around coercion.

12. ### Success_MachineImpossible? I can do thatRegistered Senior Member

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365

That might actually increase the cost of that type of labor, because the contracted business would have overhead costs and managers to pay. The cost of the contract would be larger than the cost of simply hiring janitors. It would also be more expensive because they would have to pay the CEO more. The bottom line of the company would be healthier with the 5:1 maximum wage ratio.

13. ### Success_MachineImpossible? I can do thatRegistered Senior Member

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I'm not really familiar with sports organizations....

I'd have the same 5:1 ratio from the owner's remuneration-to-lowest paid worker. The lowest paid worker might be the teller at the stadium entrance, or the Zamboni driver, or the guy giving out flyers to passer's by.

Maybe the athletes should get the same remuneration as the owner, they can work that out. Under my system, none of them would make more than 5x the amount they pay the little guy. If they wanna increase his pay, cool. It wouldn't hurt the bottom line, since the total cost of wages wouldn't increase by even one penny.

14. ### adoucetteCaca OccursValued Senior Member

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Forget the very top tier, the CEO, CFO, COO, CIO etc,
Do you really think that the tier below that, of a company like say Intel or Boeing or 3M are only worth 5 times that of the people cleaning the place at night?

Really?

I've generally been 3 levels down from the CEO and I know my contribution to the ongoing value of the company and the demands on me (travel, late nights, weekends etc), and the skills I brought to the job from years of training (and weeks spent in classes each year to stay current) were worth far more than 5 times the salary of the people who cleaned the place at night.

What I also know is I wasn't worth as much to the company as my boss was, and certainly not nearly as much as his boss.

If you think it's EASY doing those top tier jobs then you clearly have no clue what it takes to do them.

Arthur

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It's very plain to see that you aren't familiar with sports organizations - or ANY other type of business for that matter.Nor do you have any concept of contracting out jobs - hundreds of large businesses already do that because it's FAR cheaper than putting their own janitors, etc. on the payroll.

In short, you know absolutely NOTHING about how businesses/industries operate nor how wages and benefits fit into the cost of operations. And THAT'S why every single one of your ideas smacks of childish misunderstandings and rather foolish daydreaming. :shrug:

I see you chose to not reply to my last post - that's typical behavior for someone who is dodging the truth and can't take the heat. You need to admit - at least to yourself (if not everyone here) - that you have no experience in the subject of business, it's operations, etc. and just drop out of this thread before continuing to show yourself to be completely ignorant of such matters.

However... I'll give you ONE last chance to partially redeem yourself before you go: Can you tel us exactly why CEOs and their brethren are able to get such huge salaries and perks???

16. ### pjdude1219The biscuit has risenValued Senior Member

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right which is why the guy who ran AT&T down the toilet got such a great severance package.

17. ### adoucetteCaca OccursValued Senior Member

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Different issue entirely.
CEOs don't usually take a job in a new company without a decent severance package up front because when you come into a company as an outside CEO you have your work cut out for you and no matter how good you are at it, doesn't mean you can succeed.

As for ATT I don't see it, but I don't follow the company.
http://finance.yahoo.com/echarts?s=ATT Interactive#symbol=ATT;range=5y

http://online.wsj.com/article/BT-CO-20110320-703041.html

Arthur

Last edited: Apr 2, 2011
18. ### Success_MachineImpossible? I can do thatRegistered Senior Member

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I have to laugh at the abuse that these types of ideas get. You reveal yourself. You see, I understand business more than you.

A 5:1 maximum wage ratio is generous. I could simply have defined work done as Calories expended and that would REALLY have flattened the pay scale. A CEO sitting on his ass behind a desk doesn't burn a fraction of the energy that a janitor does, standing on his feet all day long pushing a broom, scrubbing toilets. I was generous though because management usually has higher education, special skill, or a helluva lot of experience. But I rebuke the pyramid scheme thinking that a CEO has a 1000-times more responsibility and therefore deserves 1000-times the pay. It's pure BS. A CEO, no matter how smart he is, no matter how stressed he is, no matter now much skill or experience, no matter how many all-nighter shifts and all-day shifts he pulls, cannot lead more than a handful of people effectively on his own.

A 5:1 maximum wage ratio is generous, would stabilize the economy, and reward the entire organization for performance. But people like yourself are so greedy, and so convinced of your superiority, that you will fight such measures all the way to your first heartattack. Pleasant journeys, I won't be joining you.

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Nope, I and others here are laughing our heads off at your total ignorance concerning business in general. Oh, and there will be no heart attacks here despite my advanced age. I'm very laid-back and relaxed because I know NONE of your childish nonsense will ever make it out of your own personal little dreamworld.

And I see you clearly don't have the knowledge OR the guts to accept the redeeming challenge I gave you. It's only you who is revealing anything negative here and you should be embarrassed at your great lack of understanding. (And by the way, I have over 30 years of business experience under my belt and during that time I've been the CEO of two different companies. And that was after working for the "other guy" for over 20 years.)

20. ### adoucetteCaca OccursValued Senior Member

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Income doesn't hurt life expectancy and you can have more fun along the way...

21. ### AsguardKiss my dark sideValued Senior Member

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I agree CEOs are payed way to much concidering there salery is more than 10 times the adverage wage but I don't think that all workers should be rated against the lowest paid. For instance should a cop or ambo who work shift work, have to be highly skilled and put there own lives on the line everyday have there wages rated against the cleaners who come in during the day and clean the station? Or the top cardiologist in a hospital have there salery rated against the lowest clerk? Or a solder fighting on the front line have there salery based againt a paper pusher in the DOD?

22. ### chimpkinC'mon, get happy!Registered Senior Member

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I was told the reason why CEO's make such outrageous levels of pay, even as they fail spectacularly, is that pay keeps the people right under them working like maniacs trying to achieve it.

Which is the only explanation I've ever had that's made any sense.

That and the tax structure somehow encourages these payouts in stock options-tax-free?
Which rather says they should tax businesses so that hiring and reinvestment are more encouraged, while huge payouts to CEOs are not.

I think the top tier are walking away with far too much of the wealth these days, leaving the rest of us with very little to hope for. And if I could work the kind of eighty-hour weeks that it would take to start my own business, I'd already...just have two jobs. My health barely holds up to a forty-eight hour week, when I'm able to wrangle some OT.

That and the health-care issue. I didn't choose to be born with a health condition (And I often wish they'd not gone all heroic measure on me).
I keep getting told we can't afford guaranteed healthcare for people like me. Right now I have healthcare access through a low-income system in my area, but it's bad.
I don't think being a member of the working poor ought to be a death sentence. But it could be.

Last edited: Apr 2, 2011
23. ### AsguardKiss my dark sideValued Senior Member

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23,049
Thankfully Australia doesn't care if your rich or poor, everyone deserves healthcare